Japan: Scrap purchase prices in Kanto region fall below JPY 50,000/t in 3 months

The purchase price of ferrous scrap from electric furnace-route steel manufacturers in the Kanto region fell below JPY 50,000/ tonne (t) for the first time in three months.

This is due to strong supply arrivals, which made manufacturers such as Tokyo Steel reduce their purchase price across grades by JPY 1,000/t at its Utsunomiya plant. Other manufacturers also moved in quickly to reduce prices by JPY 500-1,000/t.

The Gulf Price for H2 also continued to fall and is currently hovering around JPY 48,000-48,500/t, down by JPY 1,000/t. Korea’s Hyundai Steel Co Ltd also lowered its Japanese scrap purchase prices of H2 by JPY 1,000/t from the previous bid to JPY 48,800/t FOB on 20 April.

Demand for scrap weak in Nagoya

Demand for commercial-grade steel products in the Nagoya region remained sluggish across user segments like civil engineering, construction, and manufacturing industries. The pace of construction of small and medium-sized private properties, excluding large-scale properties and logistics warehouse projects, has been slow, with weather differences affecting demand for automobiles and machine tools, depending on the vehicle model.

Despite the continued passing on of prices to rebar and other long steel building products, the demand momentum has been lacking due to the softness in ferrous scrap prices.

Scrap iron remains cheap in Nagoya’s domestic and overseas markets, with yard operators aggressively selling before electric furnaces can further lower their purchase prices. The inventory of electric furnaces remains high, and the buying price was just lowered by one level at the end of last week due to adjust with the increased arrivals.

However, the market lacks upward growth, as there are no signs of overseas sources being motivated to purchase Japanese raw materials.

Overall, the sluggish demand and lack of growth indicate a challenging period for the Nagoya ferrous scrap industry.

Outlook
In the near term, the Golden Week holiday period is coming up, when electric furnaces will remain suspended for a long time. As a result, supply-demand in the area is likely to be imbalanced. Additionally, there is a lack of overseas buying appetite, and many people think that the long holiday period will keep demand weak.

Note: This article has been published in accordance with an article exchange agreement between Japan Metal Daily and SteelMint.